Bertelsmann AG

Abstract

On July 28, 2002, Bertelsmann announced the firing of its CEO, Thomas Middelhoff, in a move that surprised industry observers, analysts, and many employees. Bertelsmann, a privately held company headquartered in Germany, was one of the largest global media conglomerates, with businesses spanning book publishing, printing, music, and television. Between 1998 and 2002, Middelhoff had initiated a series of strategic initiatives aimed at fostering greater integration among its diverse business units and strengthening their competitive positions, articulated a series of guidelines that would reevaluate Bertelsmann's portfolio mix, and looked to prepare Bertelsmann for a transition to a planned initial public offering in 2005. This case describes these initiatives in detail and the decision of the supervisory board to effect a change in leadership. The new CEO, Gunter Thielen, had to decide whether to effect a fundamental shift in the company's corporate strategy or a more modest reinterpretation of the course charted by Middelhoff. Includes color exhibits.

More from the Author

While existing theory suggests that increased contact between customers and employees diminishes efficiency, recent research demonstrates that when employees can see their customers, the beneficiaries of their efforts, the quality and efficiency of the service they deliver can actually improve. Studies in food service show how revealing customers to employees can lead employees to feel more appreciated, enhancing their job satisfaction and willingness to exert effort.

Although documenting everyday activities may seem trivial, four studies reveal that creating records of the present generates unexpected benefits by allowing future rediscoveries. In Study 1, we use a "time capsule" paradigm to show that individuals underestimate the extent to which rediscovering experiences from the past will be curiosity-provoking and interesting in the future. In Studies 2 and 3, we find that people are particularly likely to underestimate the pleasure of rediscovering ordinary, mundane experiences compared to rediscovering extraordinary experiences. Finally, Study 4 demonstrates that underestimating the pleasure of rediscovery leads to time-inconsistent choices: individuals forgo opportunities to document the present but then prefer to rediscover those moments in the future. Underestimating the value of rediscovery is linked to people's erroneous faith in their memory of everyday events. By documenting the present, people provide themselves with the opportunity to rediscover mundane moments that may otherwise have been forgotten.

Complementary choices are important and pervasive yet occasionally elusive. Single consumers make complementary choices in purchase decisions (e.g., chips and salsa), product inter-operabilities (smartphones and networks), and dynamic decisions (current exercise and future healthcare consumption). Multiple consumers make complementary choices when they interact in strategic games or form networks. Firms make complementary choices when determining production inputs, entering related markets, and strategic mergers.